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Scribd Just Gutted Its eBook Service

8385443316_c0d2f59f70_hIn late 2013 two upstart ebook companies launched subscription ebook services that were variously described as a challenge to Amazon, a promising rival to Amazon/Apple, and making "Amazon’s model of selling individual books in an online shop look old". Scribd and Oyster charged $9 and $10, respectively, to let you read as many ebook as you like (Scribd later added comics and audiobooks).

Twenty-nine months later, and one of those companies has sold out to Google and shut down. The other gutted its service today.

Scribd announced on Tuesday that it is killing its unlimited subscription ebook service. As of some time in mid-March, readers will no longer be able to read all the ebooks they want. Instead, they will be issued credits each month for three ebooks and one audiobook of their choice from Scribd’s catalog of best-sellers. Unused credits will roll over to the next month.

The service will still cost $9 a month, and will include access to a nebulous "rotating collection of books and audiobooks handpicked by Scribd editors".

Scribd is spinning the news by explaining that the change will only affect a small group of subscribers ("3% in any given month"), but the fact remains that Scribd gutted its service today.

Is anyone else surprised that it took two years for this house of cards to come crashing down?

I am. Oh, I wasn’t surprised that the ebook buffet was closing; I’m just surprised that it took this long.

As many pundits have already explained, both Scribd and Oyster launched their services based on a fundamentally flawed business model. On the one side the companies were being paid a flat monthly fee by each subscriber, but on the other side the companies were paying their suppliers (authors and publishers) the wholesale price for each book read by a subscriber.

In other words, Scribd’s and Oyster’s revenues were finite and their expenses only limited by the the gluttony of their customers. And to make matters worse, Scribd et al were paying when a reader crossed a relatively low threshold (10%, according to Smashwords).

This wasn’t a business model so much as it was a recipe for disaster, and it lead Scribd to first cull romance titles (including Harlequin) and then dial down its audiobooks offering.

And now Scribd is effectively chucking the model.

This does not foretell the doom of subscription ebooks, of course. Even though it faces an uncertain future, Kindle Unlimited is still chugging along, and it paid out at least $133.6 million last year to authors and publishers under a per-page-read model (and that doesn’t even count the publishers getting the special payment terms).

kindle darkness ring joke

And let’s not forget Safari Books Online (and similar services in the library market), which has been around for over a decade and yet shows no sign of stumbling, or Disney’s service.

So no, subscription ebooks aren’t completely dead, but the bubble has burst. The market has shaken out, leaving Kindle Unlimited and a bunch of small fry (Epic, Sesame Street, etc) and putting Amazon in a clearly dominant position in yet another digital market (along with trade ebooks, audiobooks, and digital comics).

P.S. Any guesses where Amazon will next strike gold? I’m thinking education, followed by library ebooks.


image by docoverachiever

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Daniel Vian February 16, 2016 um 6:02 pm

Maybe it’s time to do some math. Figure the total KU annual revenue at $200 million a year. The total Amazon annual revenue is about $80 billion a year. The total KU revenue is an insignificant drop in the Amazon revenue bucket. Far from striking gold. But a good reason for people to buy Kindle ereaders. And the more people spend time at the Amazon website, the more they buy–and Amazon sells everything. KU could be a total loss leader and the model would still work.

fjtorres February 16, 2016 um 6:14 pm

…and it’s not a total loss leader: it has reduced the flood of perma-free ebooks, increased the visibility of Kibdle-exclusive authors and titles, and increased sales for a lot of the (presumably) better titles.
Just because the gains aren’t directly visibke *now* doesn’t mean KU isn’t a net plus to the platform.
(For example, both Sony and Microsoft give away full games every month to subscribers of their gaming service–MS gives away 4 games each month to XB1 owners, 2 to 360 owners, and the 360 games will always be playable, even if the gamer stops subscribing. Both companies see the giveaways as a net plus. And they are: free games buy customer satisfaction and brand loyalty and added sales of new releases.)

fjtorres February 16, 2016 um 6:04 pm

Don’t forget video streaming.
They are probably bigger thsn Hulu, earning awards and accolades on their original content (apparently crowd-testing pilots leads to quality shows! Who kbew!) and along with Netflix, they have reportedly been outbidding old media for quality Indie films and new series.

Nirmala February 16, 2016 um 6:26 pm

To maybe clarify some: It sounds like you can read an unlimited number of the "rotating collection of books and audiobooks handpicked by Scribd editors" and then in addition you can also read up to 3 books a month from the entire catalog. The way it is worded above makes it sound like you only get 3 books (and 1 audiobook) from that rotating collection, and that the rest of the catalog is not available to borrow.

Nirmala February 16, 2016 um 6:28 pm

Also, if you do not use up all three of your reads from the entire catalog in the month, your unused credits roll over to the next month. It might still be a good deal for the moderate reader who reads say a book a week on average, but sometimes goes a week or two without reading.

Mackay Bell February 16, 2016 um 6:43 pm

The goal of Scribd was always to help out the big publishers in their battle against Amazon. (Rather than servicing readers.) Key to that was not only undercutting Amazon’s marketplace, but creating one where big publishers could push the books they wanted to push onto readers. (Mostly through highlighting books and manipulating search features. Not to mention discouraging indies by forcing them to go through an aggregator who takes a cut of the profit.) The problem is readers have a mind of their own and the big publishers aren’t providing enough of the books readers really want. So I suspect in addition to it costing Scribd too much because of fast readers, it wasn’t working as a promotional tool for big publishing. Thus they must force their customers toward "editor’s pics" of what readers are supposed to read.

The economics of it all were always goofy, but the hope was that big publishers would like the results (keeping Amazon in check and promoting their selected authors) that it would be worth keeping afloat until they could sell out to a big media conglom. That’s looking less and less likely.

Nirmala February 17, 2016 um 1:10 pm

The big publishers might pay something or at least accept reduced royalties to have their books included in the rotating selected books that subscribers can access an unlimited number of. This might allow Scribd to offer these books at little or no cost and still be a tool for the big publishers to promote their books.

In other words the "select' books might be a way for Scribd to collect co-op from the publishers for highlighting their books.

Mackay Bell February 16, 2016 um 6:33 pm

I hadn’t thought about the perma-free deterrent aspect of KU. I just introduced a short cartoon book, specifically with the idea of making it perma-free (it contains a promo chapter of my longer sci-fi novel). I figured I’d put it on Kindle Select just a couple months to stall while I set up some accounts elsewhere. But darned if the thing isn’t getting a lot of KU reads (short seems to work to get people to flip the page). Not enough to make me rich, but enough to make me think twice before making it perm-afree. So if Amazon was thinking along those lines, it definitely could work, at least in some cases.

fjtorres February 16, 2016 um 6:39 pm

Anti-permafree is only one aspect of KU.
I suspect it will over time lead to less $0.99 long-form books and more $3.99-$4.99 titles, depending on genre and continued BPH foot-shooting.

Peter Turner February 16, 2016 um 6:50 pm

I’m curious how you attribute Safari’s seeming success, given the biz model dynamics.

Chris Meadows, Editor of Teleread February 16, 2016 um 6:58 pm

Being that it focuses on nonfiction, which is a completely different market with different dynamics, Safari is an entirely different animal altogether. Mike Shatzkin talked about that here.

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Medium Punch February 17, 2016 um 2:28 am

Does this limit include graphic novels/comics? I can easily go through three in the span of a week.

Nate Hoffelder February 17, 2016 um 7:00 am

Those probably count as ebooks, yes.

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Sharon Reamer February 17, 2016 um 7:18 am

What I wonder is the effect of ebook library loans on subscription services.

I recently found out I can check ebooks out of the US library where I maintain a local address (in Florida) even though I live in Germany. I have been going through a large swath of books – trad pub mostly – and it doesn’t cost me a dime. I read anywhere from 3-5 books a week (both fiction and non-fiction) and don’t see the need for a service like KU at this point.

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John February 22, 2016 um 10:26 pm

A lot of the "scribd selects" are actually libravox recordings, which just seems wrong. Sketchy company.

Nate Hoffelder February 22, 2016 um 10:50 pm

Those can be downloaded for free, and Scribd is charging for them? That stinks.

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sajast March 21, 2016 um 10:20 pm

New comment on old article. I’m going to request a refund and/or cancellation from Scribd. I must be in that 3% bracket of over-readers because I read way, way more than 3 books per month. It really stinks that Scribd created a business model that I loved (because it worked so well for me) but was utterly unsustainable for them, unbeknownst to me. I mean, silly me, I thought they were thinking long-term profits and had taken care of things behind the scenes. Off to see if my local library offers e-services…which I doubt.

Hombre de Paz March 23, 2016 um 1:40 pm

I wondered what the 3 Books per month meant, and had to go back and see what it used to be, since they were making the announcement as if it were great news! Sort of like: "It appeared that there had even been demonstrations to thank Big Brother for raising the chocolate ration to twenty grammes a week. And only yesterday, he reflected, it had been announced that the ration was to be reduced to twenty grammes a week."

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